London Banker Bonuses Shrinking Amid EU Crisis, Survey Finds

By Ambereen Choudhury -
Nov 28, 2011

Bankers in London’s financial
districts expect bonuses to shrink by about a fifth from last
year as the sovereign-debt crisis crimps revenue.

The average worker in the U.K. capital’s Square Mile and
Canary Wharf expects to receive a bonus valued at about 19,920
pounds ($30,854), or 24 percent of their base pay, according to
a survey by recruitment firm Astbury Marsden. That’s down from
about 35 percent of base pay, or 25,570 pounds last year. The
estimate is based on an average salary of 83,000 pounds.

“That is a real shift in sentiment on bonuses from
previous years,” Mark Cameron, chief operating officer at
Astbury Marsden, said in the statement. “In the pre-credit
crunch days, bonuses were talked about in many multiples of base
pay. This year the expectations are for fractions of salary.”

Lenders are reducing staff from New York to London as the
European sovereign-debt crisis roils markets, crimps revenue
from trading stocks and bonds, and deters companies from
takeovers or stock offerings. Banks are struggling to cut fixed
costs after raising base salaries of investment bankers by as
much as 100 percent to cushion cutbacks after regulators,
including those in Britain, imposed limits on bonuses.

New York Cutbacks

The cuts are also extending to staff on Wall Street,
according to a Wall Street Journal report today, citing a survey
by Options Group. Annual compensation on Wall Street may fall 27
percent to 30 percent from a year earlier, making it the lowest
level since 2008, the report said. Bonuses on average may drop
35 percent to 40 percent, according to Options Group.

Banks, insurers and asset managers in Western Europe have
been hardest hit by falling revenue, announcing about 105,000
dismissals this year, 66 percent more than in 2008 at the depths
of the financial crisis, data compiled by Bloomberg show. The
50,000 job cuts in North America this year are more than twice
last year’s and fewer than the 175,000 in 2008.

Managing directors are expecting a bonus equivalent to 70
percent of their base pay, or about 166,000 pounds, based on a
salary of 237,000 pounds, Astbury Marsden said.

The firm polled 1,380 City professionals, from analysts to
senior bankers. The biggest bonus expectations came from merger
bankers, while those working in fixed income had the lowest
bonus expectations, Astbury Marsden said.

Investment banks set aside revenue throughout the year for
compensation and tend to decide bonuses at year-end, with most
paid out in February and March.